In a former insurance office building on the outskirts of Charlottesville, Virginia, a new kind of sugar factory is taking shape. The 48,000-square-foot facility is being developed by a startup called Bonumose, funded in part by Hershey. It uses a processed corn product called maltodextrin that is found in many junk foods. Like its notorious counterpart high-fructose corn syrup, maltodextrin is calorically similar to table sugar (sucrose), is just as bad for your teeth, and actually causes worse blood sugar spikes.

But for Bonumose, maltodextrin isn’t an ingredient—it’s a raw material. When it’s poured into the company’s gleaming bioreactors later this year, what emerges will be a “rare sugar” called tagatose. Found naturally in small concentrations in fruit, some grains, and milk, it is nearly as sweet as sucrose but with only around half the calories. And because of the way it is metabolized, tagatose can actually improve dental and digestive health, and even stabilize insulin levels.

Although long recognized as a safe food ingredient by the FDA, tagatose has proved expensive and difficult to isolate—until now. Hershey says that Bonumose’s technology, designed to affordably convert maltodextrin into tagatose at commercial scales, is critical to its effort to formulate next-generation “better-for-you” candies.

“If we can sell anywhere near the volume of high-fructose corn syrup, then you’re talking tens of billions of dollars a year [in] revenue,” says Ed Rogers, Bonumose’s CEO. “And the effect on public health could save arguably trillions in health-care costs.”

Bonumose’s multi-enzyme conversion process originated in a company spun out of the Virginia Tech lab of Yi-Heng “Percival” Zhang. Born in China, Zhang is a bioengineer with a string of awards and inventions to his name. In 2006, Esquire magazine singled him out as one of America’s “best and brightest” for his work on converting sugar from farm waste into cheap ethanol. His lab spun out companies to build a sugar-powered “battery” for smartphones, produce medicinally useful compounds, and explore using sugar to generate hydrogen for fuel-cell vehicles. “Sugar will be the new oil,” Zhang’s email signature at Virginia Tech once pronounced.

But Zhang today isn’t sitting proudly at the helm of Bonumose’s research division, or formulating healthy chocolate, or racing a sugar-powered car. When MIT Technology Review spoke to him in January, he was sitting alone in an empty lab in Tianjin, China, after serving a two-year sentence of supervised release in Virginia for conspiracy to defraud the US government, making false statements, and obstruction of justice. He still seems dazed from his dealings with Rogers—his former business partner—and the US government. If you ask Zhang, he was guilty of nothing worse than poor judgment and ignorance of the rules; he sees himself as a man brought low by treachery. “They cheated the technology from me. They robbed me and took everything,” he says. 

Turn an ear to Bonumose, however, and it’s about the triumph of American entrepreneurship over the Communist government of China. “We did not cheat anyone,” Rogers told MIT Technology Review. “Even though we had this pretty bitter battle with Zhang, we don’t wish him any ill will at this point. Maybe he wants to blame someone other than himself, but he should look in the mirror.”

Whichever version hews closest to the truth, one thing seems clear. If sugar is the new oil, the global battle to control it has already begun.

Most humans love sugar for its gloriously sweet taste and ability to give blood sugar a turbo-boost, but Zhang is more interested in the energy it packs. His parents were physicists in Wuhan, China, and Zhang grew up eager to emulate scientific heroes like Edison, Curie, and Pasteur. After studying biochemical engineering in Shanghai, he came to the US in 1997 for a PhD at Dartmouth College, where he also met his wife.

His first enthusiasm was for biofuels, a growing research topic in the early 2000s. At Dartmouth, Zhang validated a process for accelerating the conversion of agricultural waste like corn leaves and rice straw into sugars, and thence into ethanol for fuel—the “sugar-powered car” that got Esquire so excited.

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In 2010, Zhang, Rollin, and another graduate student, Xiao-Zhou Zhang (no relation), founded Gate Fuels to commercialize their discoveries. A second spinout, Cell-Free Bioinnovations (CFB), followed in 2012. Zhang was the companies’ president, and Rollin their CEO.

The companies relied heavily on grants from the National Science Foundation. Two early awards were for a strain of soil bacteria engineered to produce precursors to plastics and fuels. Others went to the development of sugar-powered enzymatic fuel cells, a “bio-battery” with an energy density potentially 20 times that of lithium-ion batteries. Instead of plugging in their smartphones to recharge, future users might be able to top them up with sugary Coca-Cola. 

“My vision was that we would prove out the technologies, then license them to industrial partners to scale up,” Rollin says. “Percival was okay with that strategy, but his interest was always in changing the world. I think he was very frustrated with how slow things seemed to be.”

In late November 2014, Zhang—by now a naturalized US citizen—could wait no longer. He wrote an open letter to President Obama, the secretaries of energy and agriculture, and Congress, warning that the US risked missing out on the coming “megatrend” of next-generation biomanufacturing, renewable energy, and sustainable agriculture. He asked them to organize a special consortium of research institutes and industrial companies. “Keep it in mind,” he wrote, “China is the largest industrial biotechnology nation. If the USA failed to take action now, the USA might [lose] this important game forever.”

He never heard back. 

Shortly after, Zhang left on a three-week trip to China. He was starting a part-time contract at the Tianjin Institute of Industrial Biotechnology (TIB), a research institute of the national Chinese Academy of Sciences. “They were working on some projects that were very interesting,” Zhang says. “They said, ‘We know you have a lot of good projects. Why don’t you start a lab? You can hire several people and work on projects that you’re not doing in the US.’ For academics, this is common and a good idea.”

Zhang did not hide his involvement with TIB. He paid US taxes on his Chinese income (about $30,000 a year) and diligently notified Virginia Tech of his work abroad, which he says was never questioned.

Zhang’s second spinoff, CFB, meanwhile, appeared to be doing well. Zhiguang Zhu, one of Zhang’s Chinese graduate students and chief technology officer of CFB, was applying for more NSF grants. The company applied for one for improved production of a sugar called inositol. Inositol is used in supplements, to treat some mental-health issues, and as a harmless stand-in for cocaine in film and TV. The team won an award for research into the cheap production of sugar phosphates—components in the manufacture of drugs used to treat cardiac diseases, cancers and degenerative diseases. And NSF green-lighted a $750,000 proposal—CFB’s largest NSF award—to continue work on sugar-powered enzymatic bio-batteries.

PUBCHEM

Around this time, Joe Rollin secured a position at the Department of Energy’s ARPA-E research agency. To replace him, he recommended Ed Rogers, an entrepreneurial businessman with a background as a lawyer. Rogers had cofounded a company in 2003 to make edible (rather than plastic) fishing lures. He later ran a clean-energy research center in southern Virginia, using grants from tobacco settlements